Sukuk Review (2015) and Projection (2016)

In two retrospective assessments at the sukuk market in 2015 (and prospective predictions about the coming year articles in the Malaysian Insider (6 January, ‘Islamic sukuk dive over Malaysia, low oil price, says S & P’) and The National, from the UAE (6 January ,‘S & P says new sukuk issuances to decline this year’ by Mahmoud Kassem) were pessimistic.

Regarding 2015:

  • In 2015 USD 63.5 b were issued, compared with USD 116.4 b the previous year
  • Malaysia stopped issuing sukuk, which was the greatest single factor as it as among the largest global issues (issuing USD 50 b in 2015)
  • If Malaysia were disregarded the 45% drop pa would be reduced to 5%

Explanatory factors:

  • GCC states opting for conventional bonds instead due to complexity of sukuk (and presumably concomitant cost)
  • Low oil prices
  • The anticipated increase of US interest rates

Regarding 2016:

  • Drop of 20% predicted (as compared with 2015) for some of same reasons as above
  • Possible countervailing effect if a post-sanctions Iran will increase infrastructure spending
  • Sharjah in the UAE has continued to be active in the regional sukuk market, and a sovereign issue from this emirate is expected this year in a sukuk denominated in USD in the amount of USD 500 m
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